Wells Fargo Almost Loves Blacks More Than Subprime Loans, But Not

Much of the great housing fiasco has been sourced to minorities, or so most conservatives would have you think. Presumably if you could have manufactured some sort of benign holocaust and killed all the ethnics, primarily, blacks, no bank would have failed, and all would be well. Kill the ethnics, make the government take their hands off free enterprise, and abolish Fannie Mae and Freddie Mac, and things would have been that level of peachy approaching keen.

Ridiculous. We know Fannie and Freddie were not responsible for the bulk of the loans going sour. We know that all the bad "minority" loans, stacked up against all the non-minority loans, would still lead to more defaults on the part of the less colorful (meaning, non-minorities). We also know that you cannot look at the collapse of the economy due to housing problems as merely being about mortgages going unpaid. What stalled out the economy was leveraged bets by large financial firms that assumed that mortgage payments and prices would remain stable, if not escalate. Thus hindered by the miscalculation, those responsible for providing credit have been unable to funnel cash to those needing credit, resulting in one factor that is slowing the economy down, and jacking unemployment up (and furthering the crisis).

We can't help but come back to mortgage practices, and today's New York Times piece on Wells Fargo, (also read Dealbreaker's take here) and how certain employees there manipulated the home buying process when dealing with minorities. This has resulted in law suits against Wells, though we tend to suspect that like most directives from above, the intent was pure, but greed and pressure warped the process.

This theoretical fact, mentioned in the article, is particularly disturbing:

"Both loan officers said the bank had given bonuses to loan officers who referred borrowers who should have qualified for a prime loan to the subprime division. Ms. Jacobson said that she made $700,000 one year and that the company flew her and other subprime officers to resorts across the country."

and

"Both loan officers said the bank had given bonuses to loan officers who referred borrowers who should have qualified for a prime loan to the subprime division. Ms. Jacobson said that she made $700,000 one year and that the company flew her and other subprime officers to resorts across the country."

So here, customers deserving of a standard loan are funneled into subprime, with the result being much higher overall interest payments. Now whether these higher payments led to default or not (and that may be debatable), it surely underscores the delicate status of blacks in society, who remain sufficiently grateful for any sort of consideration. Or perhaps insufficiently educated. It's the psychological feeling of inferiority when you are grateful for the substandard when you actually qualify for something better.  And it's something else when others play on that, seeing blacks as an easy mark.